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Drop in pork VAT reduces demand and price of poultry

February 18, 2016

As demand for poultry dropped in January so did prices, in response to a decrease in the price of pork caused by a drop in VAT from 27% to 5% as of the beginning of this year, Hungarian daily Magyar Idők reported today.

In year-on-year terms, farmgate prices for poultry fell by 6%, according to a report by the Agricultural Research Institute, as consumers opted for pork over the course of the month, Magyar Idők reported. According to data published by KSH, pork prices dropped 17.2% in the month of January, in year-on-year terms.

The VAT cut on pork gave the meat a competitive edge that poultry producers have only been able to offset by reducing prices, László Bárány, head of the Hungarian Broiler Association, told the paper, according to Hungarian news agency MTI.

Hungary’s poultry producers were reported to be in a panic as the cut to the VAT on pork has led to a significant drop in demand for poultry meat, and other food sectors were reportedly lobbying for similar VAT decreases.

In a follow up to the reduction of VAT on pork, Hungary was reportedly considering a cut on the VAT rate of milk as part of a measure to support the dairy industry.